CARP’s Role in Securing and Defending Pension Income Splitting for Canadian Seniors

Summary

Pension income splitting has provided essential tax relief for senior couples in Canada, saving them billions of dollars since its introduction in 2007. The Canadian Association of Retired Persons (CARP), in partnership with grassroots advocates, was instrumental in advocating for this policy. Despite its success, pension income splitting remains at risk of being rolled back, and CARP continues its ongoing efforts to protect this critical benefit for Canadian retirees.

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I. The Pension Income Crisis: A History of Over-Taxation on Seniors

Before pension income splitting, many senior couples faced an unfair tax burden. Couples with one high-income and one low-income spouse were taxed at a much higher rate than those with more balanced incomes. This resulted in financial strain for seniors, particularly women, who typically had lower lifetime earnings.

Recognizing this injustice, CARP, along with grassroots leaders like Dan Braniff, volunteer Chair of the Georgian Bay CARP Chapter, spearheaded the movement to allow couples to split their pension income for tax purposes. Pension income splitting would ensure that all couples are taxed fairly, regardless of income disparities.

The Role of Grassroots Advocacy

Dan Braniff, a Collingwood resident and founder of the Common Front for Retirement Security (CFRS), was pivotal in pushing the pension splitting agenda forward. In 2003, after a Probus Club meeting, Braniff and a few colleagues began discussing the unfairness of the tax system. They organized a town hall meeting in June 2003 that attracted 320 attendees, demonstrating the widespread support for income splitting among seniors in their community.

Braniff, together with Walter Barclay, met with Murray Morgenthau, co-founder of CARP, to discuss how CARP could take their local movement, generate awareness across Canada and get the attention of the federal government. This partnership was critical in pushing pension income splitting to the national stage. By 2004, CARP’s Georgian Bay chapter had formed and rapidly grew to include 10,000 members.

The efforts of Braniff and others were instrumental in building a coalition of support. Through letters, media campaigns, and lobbying efforts, the grassroots movement brought pension income splitting to the attention of policymakers across Canada.

II. CARP’s Advocacy for Pension Income Splitting

CARP’s national advocacy campaign for pension income splitting gained traction in the mid-2000s, leading to a breakthrough in 2007. CARP and its members worked tirelessly, organizing letter-writing campaigns, meetings with MPs, and public forums. Their efforts highlighted the unfair tax treatment of senior couples and emphasized the importance of addressing this issue for Canadians approaching retirement.

Political Advocacy and Success

One of the key moments in CARP’s advocacy came when Conservative MP Helena Guergis took up the cause at CARP’s inaugural Georgian Bay meeting in 2004. Guergis, who had long been interested in pension fairness, worked with her party to make pension income splitting a policy priority. She played a critical role in promoting the issue at the Conservative policy conference in 2005.

CARP, along with the Pension Fairness Coalition and other organizations like the Royal Canadian Legion and the Retired Teachers of Ontario, formed the Common Front for Pension Splitting. This united effort culminated in an October 2006 meeting on Parliament Hill, co-chaired by Dan Braniff and independent MP Garth Turner. The meeting drew 200 attendees, including 33 MPs from all major parties.

In late 2006, Finance Minister Jim Flaherty announced pension income splitting in the federal budget, marking a significant victory for the movement. Braniff recalled learning about the announcement through an email from Garth Turner that simply read, “We won.”

III. The Economic Impact of Pension Income Splitting

Since its implementation, pension income splitting has provided substantial tax relief to senior couples across Canada. By allowing spouses to split eligible pension income, the policy reduces the overall tax burden for families, particularly those with large income disparities between spouses.

Billions in Savings

As of 2024, pension income splitting has saved Canadian seniors an estimated $15 billion in taxes. This financial relief has been particularly beneficial for lower-income seniors and their families. According to a report by the Fraser Institute, pension income splitting reduces taxes for more than 1.5 million senior households annually, with average savings of approximately $2,000 per household.

IV. The Ongoing Threat: Protecting Pension Income Splitting from Political Reversal

Despite its success, pension income splitting remains vulnerable to political changes. Governments facing fiscal challenges may be tempted to roll back the policy to increase tax revenue. CARP has consistently opposed any such moves, arguing that pension income splitting is about fairness for seniors who have contributed to the Canadian economy throughout their lives.

Political Parties’ Stance on Pension Income Splitting

In 2008, the Liberal Party assured CARP that they would not reverse pension income splitting if elected. Since then, both the Liberal and Conservative parties have expressed support for maintaining the policy, recognizing its importance for seniors’ financial security. However, CARP continues to monitor the issue closely and remains vigilant in defending the policy from potential threats.

Bill VanGorder, CARP’s Chief Policy Officer, reaffirmed the organization’s commitment to protecting pension income splitting, stating, “This is about fairness. We fought hard to secure pension income splitting, and we will fight just as hard to defend it.”

V. CARP’s Commitment to Pension Fairness

CARP’s successful campaign for pension income splitting is part of its broader commitment to pension fairness and financial security for seniors. The organization continues to work with other advocacy groups to ensure that seniors are treated equitably under the tax system. CARP’s partnerships with groups like the Pension Fairness Coalition have been critical in achieving these goals and will continue to be important as CARP defends the gains made on behalf of Canadian retirees.

Conclusion: A Legacy of Advocacy and Vigilance

Pension income splitting represents a significant victory for Canadian seniors, thanks in large part to the advocacy efforts of CARP and grassroots leaders like Dan Braniff. The policy has provided billions of dollars in tax relief, reduced senior poverty, and improved the financial security of millions of retirees. However, pension income splitting remains at risk of political reversal, and CARP will continue to advocate for its protection.

The success of pension income splitting demonstrates the power of grassroots advocacy in shaping national policy. CARP’s role in securing this victory—and its ongoing efforts to defend it—reflect the organization’s unwavering commitment to the financial well-being of Canadian seniors.

Call to Action: Stand with CARP to Protect Pension Income Splitting

Pension income splitting has saved Canadian seniors billions of dollars and provided crucial financial relief. However, this essential benefit remains at risk of being reversed. CARP has been at the forefront of securing and defending pension income splitting, but we need your support to ensure it remains intact. By joining CARP, you become part of a powerful advocacy movement that holds governments accountable. Help protect what we’ve won. Join CARP today to safeguard pension fairness for generations to come!

 

References:

1. Simcoe.com, “Pension Splitting Effort Started Right Here in the Triangle,” 2006.
2. The Globe and Mail, “Octogenarian Has a Zest for Life and Investing,” 2012.
3. CARP, “Liberals Confirm to CARP That Liberals Will Not Reverse Pension Income Splitting,” 2008.
4. Fraser Institute, “The Economic Impact of Pension Income Splitting,” 2022.
5. Bill VanGorder, CARP CEO, Public Statement on Pension Income Splitting, 2024.
6. The Government of Canada, 2007 Federal Budget Announcement.
7. Statistics Canada, “Senior Poverty Reduction and Pension Income Splitting,” 2023.